Moto's hello to Mag Mile

Motorola Inc. is racing to open a store on North Michigan Avenue -- its first retail outlet -- on June 5, before archrival Nokia Corp. can open its own store just a block away.

Motorola Inc. is racing to open a store on North Michigan Avenue -- its first retail outlet -- on June 5, before archrival Nokia Corp. can open its own store just a block away.

Motorola, the world's second-largest maker of cell phones, behind Nokia, is close to signing a temporary lease for the former Terra Museum of American Art at 664 N. Michigan Ave., according to people familiar with the plan.

Marshall Field V, chairman of the Terra Foundation's board of trustees, confirmed that Motorola is looking to move into the space as soon as possible.

Phone home: Moto plans to open its first store in the old Terra Museum. Photo: Erik Unger

The vacant museum, which is slated to be replaced by a condominium tower next year, gives Schaumburg-based Motorola a chance to beat Nokia to the Magnificent Mile. Nokia's first U.S. store is set to open sometime later in June at 545 N. Michigan Ave.

Motorola has also looked at the former Sony Gallery space at 663 N. Michigan Ave., which has been vacant for about two years, according to a person familiar with the search.

Donald Ratner, chief financial officer of the Terra Foundation, which is leasing the museum property, declines to confirm a Motorola deal. But Mr. Ratner says he expects a tenant by June, and whoever leases the space will have at most a six-month agreement that will go to a month-to-month lease until Prism Development Co. begins construction.

Finland's Nokia opened its first store in Moscow's Pushkin Square in December and plans to open another five stores this year, including outposts in New York and Helsinki, Finland, according to a spokesman. Nokia plans to operate 18 stores worldwide in three years.

The Michigan Avenue face-off comes as cell phone makers look to make a more direct connection with consumers. Until the past few years, Motorola focused more on engineering than design, lagging Nokia and South Korea's Samsung Electronics Co. Ltd. in style and marketing savvy. But under Chairman and CEO Edward Zander -- who lives near the proposed store -- Motorola is emerging as a consumer electronics powerhouse, driven by its ultra-thin Razr phone and hip new designs like the Slvr, Pebl and Q.

"Opening their own branded stores allows them to take their best features directly to consumers," says Michael DeSanto, vice-president of Walker Information Inc., an Indianapolis-based market research firm.

Motorola opened an edgy design center, dubbed MotoCity, at 233 N. Michigan Ave. in late 2003 to put its designers closer to shoppers.

Details of Motorola's first showcase store weren't disclosed, and a spokeswoman declines to comment. But if the store is in line with Nokia's concept, it will resemble an electronic playland, featuring plenty of hands-on displays and interactive kiosks that will encourage shoppers to linger.

The risk for both companies: Stores could alienate cellular service carriers, cell phone makers' largest customers. But the carriers are losing influence as industry growth shifts overseas, where most consumers buy phones from retail stores. Consumers' loyalty to handset makers outweighs their loyalty to wireless carriers, according to a 2005 survey of consumers conducted by Walker Information.

&Copy;2006 by Crain Communications Inc.

Photo

Phone home: Moto plans to open its first store in the old Terra Museum. Photo: Erik Unger